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Issues involved: Challenge to the Constitutional validity of Tamil Nadu Motor Vehicles Taxation (Amendment) Act, 1998 regarding the increase in tax rates for contract carriages.
Issue 1: Constitutional validity of tax increase The challenge was based on the uneven burden placed on contract carriage owners compared to stage carriage owners. The appellants argued that the tax was imposed indiscriminately and without rational basis, leading to an unfair burden. The appellants failed to provide sufficient details and statistical data to support their challenge, which is essential in such cases. The State's ability to justify the tax increase relies on the appellants' initial burden of proof. Issue 2: Compensatory nature of the tax There was an argument that the tax in question was compensatory in nature. Previous judgments, including one involving Jindal Stainless Ltd., were cited to support this argument. The repeated increase in tax rates, especially affecting contract carriages more than stage carriages, raised significant public interest concerns. The State could potentially demonstrate cross subsidization to justify the tax increase if it serves public interest. Conclusion The Supreme Court declined to interfere with the High Court's judgment due to insufficient pleadings at the initial stage by the appellants. The appellants were granted permission to withdraw the Civil Appeals with the liberty to file a proper writ petition with detailed data. This decision was influenced by the public importance of the issues raised, particularly regarding proportionality under Article 14 of the Constitution. The Civil Appeals were dismissed with no order as to costs, with the condition that a proper writ petition with requisite data could be filed without being hindered by the previous judgment. The judgment in a similar case was also mentioned for reference.
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